In light of what's happening in the financial sector of the US and the Wall Street, which will also affect the dollar around the world, I am not a financial expert but I have been following the market lately and of course the news. The US financial system is undoubtedly flawed and the pattern that supports it will be demolished in time. Some say that at best it will still be maintained for a few more decades. It's true that we can't say that it's the end; but the extension of the financial problem will not solve the root of the problems. It will inevitably fall, if not now but a decade or two later.

Everything that has a "beginning" (rise?) probably also has an "end" (fall?). I see this as a much needed correction on the balooning debt ... in a sense, something like this is necessary to jump start corrections for the future. Of course I'm not a financial expert either but it seems to me, forcibly over-correcting or forcing a certain direction on the economy, especially in a politically-driven atmosphere is not always the wisest strategy.

The fact is US still is a huge producer with vast amounts of resources (and labor pools). The problem has been over-spending and over-consumption at rates that are unsustainable with pretty much any production schedule ... we'll learn to live ... much like the threat of $5 a gallon gas pretty much devastated the exploding "SUV" market, this shakeup of the most over-stretched banks will hopefully have a similar effect on the credit and loan markets.

Yes Sip my thoughts the same. I believe that the old way as our elders were constant savers is the only way. Save.. save.. save. Overspending, be it consumers or the government is what did hurt this country. For years US overlived, overspent, overdecadence. It was time for the US to curb their extra extravagence appetites and start saving. As if we needed more nail salons, more houses, etc. etc. etc. Why the war itself after the medical bills paid it would cost us 1 trillion dollars; while it could have minimized the government deficit and save the taxpayer's money. Especially the lower and the middle class in this country.

In my opinion the main culprit is the extravagant CEO bonuses, which directs them to maximise dividend share yield for the short term in order to get huge bonuses at the cost of harming the companies long term viability.If you look at all the companies that went bally up, there are always shady deals or misrepresantation of their financial statements prior to their failure.

Thanks Yervant, and they actually mentioned about it in the news what you said above to the ref. of the CEO's overspending and their costly bonuses. They all add up you see, overspending is the culprit and the fabric of the American people and their downfall too. As for the government, they have spent lavishly and their hegemony behaviour is of course the source as well. They're too anxious to control the world and the oil. They brought the country into more and more of deficit levels that for instance China doesn't wish to lend any monies to the U.S.

NEW YORK (AP) -- Wall Street suffered through another traumatic session Monday, with the Dow Jones industrials plunging as much as 800 points and setting a new record for a one-day point drop as investors despaired that the credit crisis would take a heavy toll around the world. The Dow also fell below 10,000 for the first time since 2004, and all the major indexes fell more than 7 percent.

ADVERTISEMENTThe catalyst for the selling was the growing realization that the Bush administration's $700 billion rescue plan and steps taken by other governments won't work quickly to unfreeze the credit markets. Global banks, hobbled by wrong-way bets on mortgage securities, remain starved for cash as credit has dried up.

That sent stocks spiraling downward in the U.S., Europe and Asia, and drove investors to sink money into the relative safety of U.S. government debt. Fears about a global recession also caused oil to drop below $90 a barrel; and the benchmark index that gauges fear in the market jumped to the highest level in its 18-year history.

"The fact is people are scared and the only thing they're doing is selling," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working."

The selling was so extreme that only 67 stocks rose on the NYSE -- and 3,155 dropped. That's a telling sign considering the stock market is considered a leading economic indicator, with investors tending to buy and sell based on where they believe the economy will be in six to nine months.

Monday's steep decline on Wall Street indicates that investors are becoming more convinced that the country is leading a prolonged economic crisis that is spreading to other nations. Over the weekend, governments across Europe rushed to prop up failing banks, while the governments of Germany, Ireland and Greece also said they would guarantee bank deposits.

As the U.S. tries to repair its battered banking system, the German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG. And France's BNP Paribas agreed to acquire a 75 percent stake in Fortis's Belgium bank after a government rescue failed.

The Fed also took fresh steps to help ease credit markets. The central bank said Monday it will begin paying interest on commercial banks' reserves and will expand its loan program to squeezed banks.

Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co., said government intervention certainly might help. However, he believes investors are sensing that what's happening in the economy is a shift in the extent to which consumers and businesses take on debt, a change that will take years to play out.

"This is a global deleveraging of many economies," he said. "It might appear that you're going into the abyss where the economy grinds to a halt and the financial system goes into complete disarray. But, what the market is really reading here is that this is a global phenomenon, and when you delever like this, it is a process that takes a very long period of time measured in years, not quarters."

That, he said, is being reflected in major stock indexes being repriced significantly lower. In late afternoon trading, the Dow Jones industrial average fell 800 points, then recovered slightly in erratic trading to a loss of 764.38, or 7.40 percent, to 9,561.00, dropping below 10,000 for the first time since Oct. 29, 2004. The Dow surpassed its previous record for a one-day point decline -- 778, which the blue chips suffered a week ago when investors feared the bailout package might not pass Congress.

I wish I am not right but what is happening right now is the tip of the iceberg. 700,000 billion is what is needed to cover the day-to-day cash balance in check.

Probably we will witness American tragedy 2, or rather Soviet Union remake!

And those same dogs who waste zillions of doLlars in the deserts of Iraq, Afghanistan et al, while Iraq is reaping zillions of dollars selling oil to Haliburton and Afghanistan is reaping zillions selling narcotic dope to America. Those same dogs who give themselves zillions of dollars in CEO perks, yet those same dogs talk about "CORRUPTION" in Armenia!!! SHUNSHANORDIS!!!Corruption in Armenia? When a poor, father of six policeman tries to extort the cost of a loaf of bread?How does that compare when those SOB CEOs declare bunkruptsy with 450 million in retirement benefits? When the average American can't put 50 cents together to buy a loaf of bread!!!

And those same dogs who waste zillions of doLlars in the deserts of Iraq, Afghanistan et al, while Iraq is reaping zillions of dollars selling oil to Haliburton and Afghanistan is reaping zillions selling narcotic dope to America. Those same dogs who give themselves zillions of dollars in CEO perks, yet those same dogs talk about "CORRUPTION" in Armenia!!! SHUNSHANORDIS!!!Corruption in Armenia? When a poor, father of six policeman tries to extort the cost of a loaf of bread?How does that compare when those SOB CEOs declare bunkruptsy with 450 million in retirement benefits? When the average American can't put 50 cents together to buy a loaf of bread!!!

Hargeli Arpa,According to some forum member you sound as if you are anti success...since these multi millionaire scum bags have earned(sic) their fortunes fairly!Is this statement not an oximoron? Show me a Zillionaire and I will proove to you he has had some questionable dealings in his start and quest for wealth.Of course there are rare exceptions that make the ruleThe dogs you are reffering to will always have, "whatever the going flavor of the month is" never enough!The funny thing... even if caught with their hands in the till, thay end up in a glorified jail serving a minimum of time! This of course is possible since in planning and perpetrating a fraud, they also plan to have enough of moolah stashed away to buy all and sundry...

These people remind me the Dr. who a cigarette hanging from his lips advises the patient NOT TO SMOKE! adding do as I say not as I do...

It will not surprise me if US of A as a desperate act, devalues paper dollars just as ex USSR did on two occasions by devaluing the Ruble as much as 90% in the late 40s'. There comes a time when the frenzyof printing green backs will bite the hand that feeds it...the American taxpayer!sirov,Garo

In my opinion the main culprit is the extravagant CEO bonuses, which directs them to maximise dividend share yield for the short term in order to get huge bonuses at the cost of harming the companies long term viability.If you look at all the companies that went bally up, there are always shady deals or misrepresantation of their financial statements prior to their failure.

Dsaghig welcome to Hyeforum.

The main culprit is the banking system itself, starting from the Federal Reserve. After all, it was the Federal Reserve's easy credit policies under Greenspan which fueled both the dot com bubble and then the housing bubble. Artificially low interest rates created this notion among banks that they can lend without impunity, and people who would otherwise not qualify for loans all of a sudden got loans. The Fed got to its printing presses and started printing more money, and thereby devaluing the dollar even further. Republicans borrow and spend, Democrats tax and spend.

For years this set up proceeded and the mindless American zombie of a consumer consumed and consumed and the government spent and spent. This is a symptom of something that is an all too American phenomenon.

The current frenzy of socialism amid the crisis is indicative of how misinformed and outright ignorant politicians are. Everyone loves and supports capitalism when the benefits are going, but when there are losses then its socialism - bailout, and now the Treasury wants to get a stake in financial institutions and further bringing America's financial system under a more socialized system.

People don't realize that the problems of today are the results of regulations and interventions of the past. The interventions and regulations of today will create recessions and even more problems down the line. In order to pass this bailout, the U.S. government had to raise debt on the national debt limit. Thanks to the bailout bill approved last week, the nation's borrowing limit has been raised to $11.3 trillion from $10.6 trillion. As of last Friday, the national debt stood at $10.1 trillion, roughly $33,500 owed by every American. This country is bankrupt. Yet you have the two establishment candidates Obama and McCain talking about all the programs and spending they are going to be doing, from healthcare to social security, not to mention continuing the unjust wars in Iraq and Afghanistan. Where do you think they will get this money? Will foreigners continue to finance America's excess? I think not. That means we, the people, will pay the price.

The Party is Overby Peter Schiff, Euro Pacific Capital | October 10, 2008

More than just a mere liquidity or credit crisis, the current financial storm represents the death throes of the old global economic order, and perhaps the birth pains of a new one. The sun is setting on the borrow and spend culture that has defined us for a generation. Our long ride on the global gravy train is finally coming to an end, and once it does nothing will be the same. The sooner we come to grips with this the better.

Despite the myriad of proposals that are coming from Washington and other world capitals, we must understand that this crisis cannot be cured by governments. In the United States, credit is gone because savings are gone. Our shallow pool of savings has been depleted through bad loans, and we can no longer entice foreigners to lend us their available savings. Given that we are already too loaded up on existing debt they we cannot realistically repay, who can blame them for not wanting to lend us more?

As a result, the free market is trying to put an end to our spending spree. Without savings or home equity to fall back on, Americans struggling with rising prices are finally being forced to cut back. This has terrified our leaders and is causing them to dismantle the remaining structure of our free enterprise-based economic system.

The intention of all these daily federal interventions is to keep the credit spigots open so Americans can go even deeper into debt to buy more stuff they can't actually afford. This should be clear enough to anyone who listens to what our leaders are actually saying. When speaking about the need for an even larger fiscal stimulus package, Barney Frank, chairman of the House Financial Services Committee, said, "We have to prop up consumption." He has it backwards. The government has been propping up consumption for far too long, and the best thing they can do now is remove the props so spending can be replaced by savings.

The sad reality is that we borrowed and spent our way into this crisis, and we are not going to borrow and spend our way out of it. Legitimate credit can only be supplied if there are genuine savings to finance it. Savings can't be magically concocted into existence by a printing press, but can only be created by consumers who spend less than they earn. Efforts to fool the market will not work and will ultimately lead to a monetary disaster and runaway inflation.

Were the government to allow market forces to work, Americans would now have to pay cash for their consumption. That would mean no instant credit for new cars, plasma TVs, appliances, consumer electronics, clothing, furniture, etc. Unless buyers actually had the cash in their checking accounts these purchases would have to be deferred. From an economic perspective this is precisely what the doctor ordered. But for an economy based 72 percent on consumer spending, the medicine will go down hard.

Ultimately, a serious reduction in consumer and mortgage credit, combined with an increase in personal savings, would again provide a pool of needed capital for businesses to produce products and provide employment opportunities. However, the danger is that this potential credit could be completely crowded out by massive borrowing by the Federal Government. In addition, prices for such things as houses and college tuition will fall sharply, as the credit artificially propping them up disappears. People would still be able to buy houses and send their kids to college only they would pay much lower prices when they do.

However, if the government keeps creating inflation to artificially sustain consumer borrowing and spending, there will be no savings left to fund anything and prices will be so high that despite massive consumer spending there will be few goods that Americans could actually afford to buy.